Qantas Cash Flow Forecasting
Qantas | 2007 | 2008 | 2009 | 2010 | 2011 | Revenue | 15060 | 15627 | 14552 | 13772 | 14894 | Net income($M) | 673 | 970 | 123 | 116 | 249 | Net profit margin | 4.48% | 6.23% | 0.85% | 0.84% | 1.67% | × Asset turnover | 0.77 | 0.79 | 0.73 | 0.69 | 0.71 | = ROA | 3.45% | 4.92% | 0.61% | 0.58% | 1.19% | × Financial leverage | 3.45 | 3.44 | 3.49 | 3.34 | 3.40 | = ROE | 11.93% | 16.91% | 2.13% | 1.94% | 4.05% | NOPAT margin | 6.48% | 8.72% | 1.40% | 1.84% | 2.93% | Profitability analysis
Virgin blue | 2007 | 2008 | 2009 | 2010 | 2011 | Revenue | 2169 | 2335 | 2635 | 2982 | 3271 | Net income($M) | 216 | 98 | -160 | 21 | -68 | Net profit margin | 9.96% | 4.20% | -6.07% | 0.70% | -2.08% | × Asset turnover | 0.94 | 0.70 | 0.78 | 0.77 | 0.85 | = ROA | 9.37% | 2.94% | -4.75% | 0.54% | -1.77% | × Financial leverage | 3.10 | 3.60 | 5.84 | 4.17 | 4.15 | = ROE | 29.03% | 10.59% | -27.73% | 2.25% | -7.34% | NOPAT margin | 14.93% | 7.19% | -6.14% | 3.05% | -1.43% |
During financial crisis 2008-09, both firms suffered a significant decrease. To be more specific, Qantas’s net income decreased to $123 million and Virgin’s declined to $-160 million. Though their revenue did not change much, their net income decreased as variable expenditure increased, as a result of implementing new strategy of price promotion. In the following recovering years, net profit of Qantas increased from $116m to $249m, which is only one quarter of net income before GFC. The same situation happened with ROE, which dived in 2009 and continued decreasing slightly in 2010. Three drivers of ROE – net profit margins, asset turnover, and financial leverage – are displayed in the table. From 2007 to 2010, two companies’ decrease in ROE is largely driven by decreases in its net profit margin and in its asset turnover. In fact, their financial leverage slightly increased,
Virgin blue | 2007 | 2008 | 2009 | 2010 | 2011 | Revenue | 2169 | 2335 | 2635 | 2982 | 3271 | Net income($M) | 216 | 98 | -160 | 21 | -68 | Net profit margin | 9.96% | 4.20% | -6.07% | 0.70% | -2.08% | × Asset turnover | 0.94 | 0.70 | 0.78 | 0.77 | 0.85 | = ROA | 9.37% | 2.94% | -4.75% | 0.54% | -1.77% | × Financial leverage | 3.10 | 3.60 | 5.84 | 4.17 | 4.15 | = ROE | 29.03% | 10.59% | -27.73% | 2.25% | -7.34% | NOPAT margin | 14.93% | 7.19% | -6.14% | 3.05% | -1.43% |
During financial crisis 2008-09, both firms suffered a significant decrease. To be more specific, Qantas’s net income decreased to $123 million and Virgin’s declined to $-160 million. Though their revenue did not change much, their net income decreased as variable expenditure increased, as a result of implementing new strategy of price promotion. In the following recovering years, net profit of Qantas increased from $116m to $249m, which is only one quarter of net income before GFC. The same situation happened with ROE, which dived in 2009 and continued decreasing slightly in 2010. Three drivers of ROE – net profit margins, asset turnover, and financial leverage – are displayed in the table. From 2007 to 2010, two companies’ decrease in ROE is largely driven by decreases in its net profit margin and in its asset turnover. In fact, their financial leverage slightly increased,